Targeting the Financial Industry: Operation Python

As most of you saw last week, Senator Elizabeth Warren grilled Wells Fargo CEO John Stumpf, calling him to resign and face criminal charges for his ‘negligence.’ Over 5,300 employees of Wells Fargo were found creating false accounts and opening up said accounts without the customers’ knowledge.
This act of political theater is of far greater significance than any “presidential” debate. For it ultimately matters not which alpha vermin contaminates the Oval Office in 2017—not in comparison with the future shape of Congress, which is responsible for penning regulatory legislation for the financial industry.

Since 2010, such legislation has been partisan in origin, populist in nature, hysterical in tone, and (at best) clumsy in execution. The recent settlement ($185 million) agreed to by Wells Fargo pales in comparison with the billions Chase J.P. Morgan has shelled out over the course of this decade. Nor is the feeding frenzy confined to domestic banks—witness the $14 billion levy on Deutsche Bank.

Financial games are nothing new. The stranglehold of regulation slapped on the money industry worldwide this past decade has proven useless at curbing the eternal impulse to profit (witness even the recent sad hand-wringing by none other than Larry Summers, himself hardly an opponent of Dodd-Frank, over how regulation has actually made banks “less safe”).

What has occurred over this debacle of a decade is how public outrage over financial chicanery has been molded by politicians (especially those in Congress) into a political weapon used to extort cash from the world’s biggest banks—essentially turning the financial industry into a government ATM. (Where, you may ask, did those billions in fines and settlements actually go?)

The Wells Fargo show trial is just the beginning of Dodd-Frank II, or something far worse should Washington morph back into a single-party monster. Prepare for at least four—perhaps eight—years of sub-2% economic growth, the continuing explosion of unregulated shadow banking worldwide, and endless on-air Capitol Hill screamfests spraying bile on bankers. And less service and higher fees from your local bank. Oh, and about that loan you needed…